Petri Laine has been part of building the Finnish business angel ecosystem and currently manages the largest VC portfolio in Finland at Innovestor. We asked Petri to share his thoughts about investing as a lead investor together with business angels.
What made you become a startup investor?
My day job is to run investments at Innovestor VC, which has the largest startup portfolio in Finland and is a partner with NordicBAN. I have been involved and worked with angels for over 20 years as an entrepreneur consulting startups, investor (six angel investments of my own prior to 2006). From 2006 onwards I've managed one of the largest and most active seed funds in Finland/Nordics namely the former Seed Fund Vera of Finnvera (special funding agency of the Finnish government, bit like e.g. ALMI in Sweden) that we privatized in December 2016 and is now managed by Innovestor Ventures.
When Finnvera launched its seed fund in 2006 as a two year experiment and 10 MEUR at disposal they asked me to run it. Mostly due the work that I had already done with startups. In early 2000s I was active in creating a programme that was supported by Sitra and the second largest banking group in Finland. We created a programme of non-dilutive profit share loans for start-ups and over period of some two years well over 40 companies were funded with some 6 million euros (big money at that time) i.e. I could say that I have been doing startup investments almost 20 years. Already in that programme we wanted to work with angels. Already in that programme we wanted to work with angels, as they brought in the knowledge and equity that was leveraged by this loan. Active co-operation was also one of the goals of Finnvera and thus they offered this new opportunity to me. Absolutely an offer too tempting to say no to! And here I am… over a period of ten years the fund grew to be 135 million euros and we invested over 160 million euros (so redistributing exits) in 235 Finnish startups in all fields of technology. Most deals we syndicated with angels from Finland and further afield. EBAN even nominated us as the best syndicating fund for angels few years back. We also built an angel network of our own (200 members) that we subsequently merged with FIBAN (great decision, btw). So, it could be said that even though having not been an angel for the past 12 years I do understand a bit how an angel works. That is also the reason we want to be active in NordicBAN.
Regarding my own portfolio that I mentioned. A classic angel portfolio: one good exit, one nice, two returning part and two belly-ups – as a whole returning my investments.
Your startup investments and exits?
Innovestor´s portfolio is today 113 companies in all fields of technologies but also couple of non-tech investments like the fashion brand Makia and kitchen ware brand Magisso. There have been many good exits as well as less good over the years. Most of them have been trade sales to industrial buyers but also selling shares to the next phase investors. Some to mention www.eniram.com, novel tech to lower ship fuel consumption, www.pegasor.com, measuring system for particle emissions, www.iLoq.com, smart locking system etc. – sometimes it takes also some time… we invested together with an angel group to a company called RM5 Software that we sold through share swap to a company called Efecte. Efecte did an IPO in December 2017 and thus created also liquidity for RM5 investors.
What kind of startups and industry makes you excited?
I have very curious mind so I like to look companies in all fields. That's something that is beautiful in this work and startup world: not a single day that you would not learn something new or meet exciting, clever, passionate and great people. If I have to choose some areas it seems that I am currently more involved with B-to-B rather than B-to-C, quite a bit medtech and medtech related cases as well as enterprise software.
I get excited always when I have genuine discussion with the team, and when looking at the case the heart warming feeling: Wow! That is clever! Whether it is for the tech or business concept. For me it is also pivotal whom else are investing in the deal and that everybody, the founder, the co-investor, and other stakeholders, are aligned and focused on building a great business (exit will follow).
However, one should always remember a fantastic Arab proverb: “Whom is looking for a perfect camel, ends up walking.
How do you see your future in angel investing?
We will definitely see more cross-border investments in post seed phase. Seed I believe to be bit more local. Different platforms will have an increasing role and we will be see much deeper co-operation and even consolidation among angel groups. We will also see more investments structured through investment specific vehicles.
What is the best way for startups to approach you?
I am very approachable: e-mail, LinkedIn, phone call (I always try to call back non-answered calls by the end of the day), introductions are great. (But you can skip leaving a message to the answering machine).